Stupid student gets a "no" from the Supreme Court. http://finance.yahoo.com/news/supreme-court-denies-appeal-on-student-loan-erasure-163829406.html
It's an interesting argument he attempted. Basically, "I racked up way too much debt and, through my own fault, am generally unable to find employment at the level that would allow me to pay it back." Went to law school but failed the bar multiple times. Had a business degree but also had a criminal record that made him undesirable for a lot of positions. On the one hand, most of this guy's misfortune seems to be his own fault. On the other, I do wonder what the equitable solution might be for say, a physician, who loses the ability to practice medicine and how their debt should be handled. I'm not necessarily talking about a doctor who loses his license for taking selfies with unconscious patients. But perhaps a physician, lawyer, engineer etc who may not be able to work in that capacity any longer due to say, disability. Paying off medical school size student loans is a daunting task even when you are making MD money. Take the MD money out of the equation and you're talking about a lifetime of debt and a loan that will simply never be repaid. So bad news for this guy, in general. But the real tragedy (in my opinion) would be if his case screwed the path of a blind former doctor or a lawyer with early onset Alzheimers potentially discharging their debt because they are in an equally hopeless financial situation that was not a creation of their own decisions.
The gov't has a total and permanent disability discharge program for federal student loans, and private student loans CAN be discharged via bankruptcy under certain circumstances. However, those circumstances are narrowly defined and many attorneys just default to "student loan debt can't be discharged through bankruptcy" and don't bother taking on clients who want to try. As for the guy in the article, I don't even need to read it to say that if he's in default on his federal loans all he has to do is consolidate them (takes 90 days) and they immediately come out of default. On the consolidation application he would choose a repayment plan, and he could choose the Income Contingent plan, which is just one of many repayment options that are available now. His payments would depend on his income and wouldn't be more than (I think) 15% of his discretionary income per month. If he made less than a certain amount a month, then he'd pay either nothing or a maximum of $5 for that month, I forget which. After 25 years of payments, the remaining balance would be discharged. So, he has a way not to face financial hardship or ruin. He has/had options, he just didn't want them.
But why is that such and "interesting" argument? We apply that exact same logic in a lot of areas of human society. The idea of that people who provide services have a social duty to "naive consumers" applies to lots of areas of consumer law such as auto lemon laws (three day buy back), credit card applications (why we have full disclosure of terms), legal services (why judges frown on pro se litigants) etc etc. Educational loans are one of the few areas in a person life that are truly cavet emptor. What really going on here is this: If person A takes advantage of Person B's nativity the People will step in to protect Person B from exploitation. But if the People themselves take advantage on Person A, then woe betide that person. So long as colleges have a free hog at the People's trough this is what is going to happen. I'm sorry, I do not blame him for one moment. I blame the system that allowed this to happen in the first place.
And correctly so, IMO. What you are really doing is blaming the victim. He still has the duty to clean up a mess alone that he did not make alone. The state loaned him the money without any exercise of what in any other commercial transaction would be a duty of due diligence. They made no individualized assessment of his ability to repay before loaning him the money. If a person takes out a credit card under those conditions they would not have to pay back the money. So why should he have to wait 20 or 20 years to get his loans discharged? Why should he suffer one tiny iota for the government's failure?! The underlying problem is that as a society we want to give people money so that they have equal access to education. That's fair enough. But when things go wrong, as they often do in human life, we want to then put the burden on the one who has suffered the misfortune. In any other endeavor that would be know either as "enticement" or a "bait and switch". But since it is the government, just ignore all that and let him rot.
"I make too much money to repay my student loans." I Make Too Much Money to Repay My Student Loans | Steve Rhode
Thanks for that link. In my mind there is a difference between a person who is unable to pay their student loans during a bankruptcy proceeding and a person who is unwilling to repay their loans because they want the government to subsidize a certain lifestyle. The lifestyle that "Steve" in the link above wants to lead (house, wife, kid) might normatively be a good thing but I do not see why the government should subside it. OTOH, a person who is in a BK proceeding is not asking for the government to subside a lifestyle--they are trying to get a new start in life. If you don't like that idea then your real objection is not to student loans, your real objection is to the whole idea of bankruptcy. That's OK because there are some people who view BK as a moral hazard in and of itself. I want to be clear on this point. I'm not opposed to student loans as an abstract concept. What I believe is that student loans have been abused by institutions of higher education who have loaned money on nothing more than a hope and a prayer. No different than how a half-way house for victims of domestic violence is designed to allow people to get a new start in life, BK is designed to do the same thing. If one is in BK one is hurting; it is an option of last resort. As a consequence I also believe that non-forgiveness of student loans fundamentally cuts against the purpose of BK. Steve is simply trying to avoid making sacrifices. That's a far cry from someone whose situation is financially hopeless.
Then again, there's this . . . Debt Dodgers: Meet the Americans Who Moved to Europe and Went AWOL on Their Student Loans | VICE | United States
If you want to destroy your U.S. based credit, that's your business. It doesn't seem any of these people went overseas specifically to outrun debt. It seems they wanted to move overseas, did so, and while there simply stopped paying student loans and never faced any consequences. Notice the one gentleman who fled his $160,000 student loans despite the fact that his parents co-signed them. So, he didn't outrun his debt. He just dropped the bill in his parents' lap. Thanks, son. I always caution people from boasting about their cleverness too much, however. They won a battle, for sure. But if colleges started say, rescinding the degrees of people who willfully default on their loans, I imagine people will get quite irate that they are unable to have their cake and eat it too.
There's a lot of rationalizing going on there. Especially the guy who thinks he's got some kind of patriotic duty to ignore his loans. The real answer is probably to make student loans socially unacceptable. If people refused the borrow and enrollments were threatened, college costs would come down. But THAT won't happen.
